TENCENT(00700)2024-05-14 08:30Cloud Services and Market Leadership - Tencent Cloud's audio and video solutions have attracted more domestic and international clients, particularly in the media, entertainment, and live streaming industries, and have been ranked as the leader in the Chinese market by IDC for six consecutive years[1] Revenue and Profit Growth - Total revenue for Q1 2024 increased by 6% year-over-year to RMB 159.5 billion, with value-added services contributing 49% of total revenue, down from 53% in the same period last year[4] - Fintech and business services revenue grew by 7% year-over-year to RMB 52.3 billion in Q1 2024, driven by strong growth in wealth management services and video account merchant service fees[5] - The gross profit of fintech and business services increased by 42% year-over-year to RMB 23.9 billion in Q1 2024, with the gross margin rising from 34% to 46%[7] - Net profit attributable to equity holders of the company increased by 62% year-over-year to RMB 41.9 billion in Q1 2024, while non-IFRS net profit increased by 54% to RMB 50.3 billion[9] - Revenue from value-added services decreased by 0.9% year-over-year to RMB 78.6 billion in Q1 2024, but gross profit increased by 21% quarter-over-quarter to RMB 45 billion, with the gross margin rising from 54% to 57%[13] - Net profit for the period increased to RMB 4,265.1 million in Q1 2024, up from RMB 2,639.4 million in Q1 2023, representing a growth of 61.6%[26] - Total comprehensive income for the period rose to RMB 5,291.9 million in Q1 2024, compared to RMB 2,478.9 million in Q1 2023, a significant increase of 113.5%[26] - Equity attributable to the company's shareholders increased to RMB 51,673 million in Q1 2024, up from RMB 23,612 million in Q1 2023, reflecting a 118.8% growth[26] - The company's equity holders' profit attributable for the three months ended March 31, 2024, was RMB 41,889 million, compared to RMB 25,838 million for the same period in 2023[100] - Diluted earnings per share for the three months ended March 31, 2024, was RMB 4.386, up from RMB 2.639 for the same period in 2023[100] Financial Position and Cash Flow - The company's cash and cash equivalents stood at RMB 161 billion as of March 31, 2024, with total cash and equivalents including term deposits reaching RMB 445.3 billion[23] - The company's net cash position improved to RMB 92.5 billion as of March 31, 2024, compared to RMB 54.7 billion at the end of 2023[23] - Free cash flow generated in Q1 2024 was RMB 51.9 billion[51] - The company's total equity at the end of Q1 2024 stood at RMB 916,769 million, compared to RMB 873,681 million at the beginning of the year, showing a 4.9% increase[28] - The company's retained earnings increased to RMB 857,015 million at the end of Q1 2024, up from RMB 813,911 million at the beginning of the year[28] - Non-controlling interests increased to RMB 68,182 million at the end of Q1 2024, compared to RMB 65,090 million at the beginning of the year[28] Expenses and Costs - Transaction costs increased to RMB 34,603 million in Q1 2024, up from RMB 33,271 million in Q1 2023[65] - Employee benefits expenses decreased to RMB 26,032 million in Q1 2024, down from RMB 27,299 million in Q1 2023[65] - R&D expenses reached RMB 15,678 million in Q1 2024, compared to RMB 15,181 million in Q1 2023[65] - Amortization of intangible assets decreased to RMB 6,897 million in Q1 2024, down from RMB 9,442 million in Q1 2023[65] - Media content amortization was RMB 6,280 million in Q1 2024, down from RMB 8,804 million in Q1 2023[66] - Subsidies and tax refunds decreased to RMB 1,053 million in Q1 2024, down from RMB 2,740 million in Q1 2023[68] - The total remuneration cost for the three months ended March 31, 2024, was RMB 26 billion, compared to RMB 27.3 billion for the same period in 2023[145] Investments and Financial Instruments - Gains from deemed disposal of investments were RMB 3,982 million in Q1 2024, up from RMB 964 million in Q1 2023[69] - Fair value losses on financial instruments were RMB 1,041 million in Q1 2024, up from RMB 213 million in Q1 2023[70] - Investments in associates increased to RMB 250,954 million at the end of Q1 2024, up from RMB 245,659 million at the end of Q1 2023[80] - Fair value changes in financial assets measured at fair value through other comprehensive income were RMB 1,558.6 million in Q1 2024, down from RMB 3,559.5 million in Q1 2023[83] - The company's investment in associates had a fair value of approximately RMB 300.8 billion as of March 31, 2024, compared to RMB 351.594 billion as of December 31, 2023[102] - Impairment provisions for associates with signs of impairment totaled RMB 787 million for the three months ended March 31, 2024, compared to RMB 271 million for the same period in 2023[103] - The company's financial assets measured at fair value through profit or loss totaled RMB 226,228 million as of March 31, 2024, compared to RMB 226,048 million as of December 31, 2023[104] - The company's investment in listed enterprises under financial assets measured at fair value through profit or loss was RMB 13,740 million as of March 31, 2024, compared to RMB 11,495 million as of December 31, 2023[104] - The company's investment in unlisted enterprises under financial assets measured at fair value through profit or loss was RMB 190,259 million as of March 31, 2024, compared to RMB 190,698 million as of December 31, 2023[104] Tax and Financial Reporting - The company's current tax expense for the three months ended March 31, 2024, was RMB 11,987 million, compared to RMB 9,148 million for the same period in 2023[97] - The company's deferred tax expense for the three months ended March 31, 2024, was RMB 2,182 million, compared to RMB 2,317 million for the same period in 2023[97] - The company's total tax expense for the three months ended March 31, 2024, was RMB 14,169 million, compared to RMB 11,465 million for the same period in 2023[97] - The company's subsidiaries in Mainland China enjoy preferential corporate income tax rates of 15% and 10%[45] - The interim financial data has not been audited but has been reviewed by the auditor[58] - International Accounting Standards (IAS) are followed for financial reporting[190] Share Repurchases and Equity - The company repurchased and canceled shares worth RMB 8,941 million during Q1 2024[28] - The company repurchased a total of 51,040,000 shares at a total cost of approximately HKD 14.8 billion (excluding expenses) during the three months ended March 31, 2024[143] - The total number of share options as of March 31, 2024, was 114,697,849, with an average exercise price of HKD 346.17[111] - The number of reward shares increased from 132,989,249 at the beginning of the period to 145,478,862 at the end of March 31, 2024[113] - The number of share options exercised during the period was 17,411,183, with an average exercise price of HKD 232.33[111] - The number of reward shares granted during the period was 29,839,111, compared to 16,267,451 in the same period last year[113] - The company's total share options exercisable as of March 31, 2024, were 57,731,594, with an average exercise price of HKD 357.90[111] - The company's shares were repurchased at prices ranging from HKD 271.20 to HKD 308.60 per share during the three months ended March 31, 2024[130] - The company's total repurchase cost for January 2024 was HKD 9.824 billion, and for March 2024, it was HKD 5.010 billion[130] - The company's total repurchase cost for the three months ended March 31, 2024, was HKD 14.835 billion[130] Borrowings and Liabilities - Long-term USD bank loans (non-current portion) amounted to USD 10,997.3 million as of March 31, 2024, with interest rates ranging from SOFR + 0.80% to 0.95%[122] - Short-term RMB bank loans increased to RMB 11,116 million as of March 31, 2024, with interest rates ranging from 1.60% to 3.65%[123] - The company's total borrowings as of March 31, 2024, were RMB 201,191 million, compared to RMB 197,356 million at the end of 2023[122] - Long-term RMB bank loans (non-current portion) decreased to RMB 4,318.4 million as of March 31, 2024, from RMB 4,600 million at the end of 2023[122] - The company's long-term USD notes payable (non-current portion) amounted to RMB 130.974 billion as of March 31, 2024, compared to RMB 137.101 billion as of December 31, 2023[140] - The current portion of long-term USD notes payable was RMB 20.569 billion as of March 31, 2024, compared to RMB 14.161 billion as of December 31, 2023[140] - The total principal amount of notes payable and applicable interest rates remained consistent at USD 7.5 billion and USD 20.7 billion, respectively, as of March 31, 2024, and December 31, 2023[126] - The company's notes payable are unsecured, with interest rates ranging from 1.375% to 4.700%[141] Other Financial Metrics - EBITDA for Q1 2024 was RMB 65.1 billion, up from RMB 53.9 billion in the same period last year, while adjusted EBITDA increased to RMB 69.3 billion from RMB 59.5 billion[19] - Revenue for the three months ended March 31, 2024, was RMB 149.986 billion[34] - Gross profit for the period was RMB 68.182 billion[34] - Operating profit stood at RMB 38.042 billion after adjustments[34] - Net profit attributable to equity holders was RMB 26.394 billion[34] - Disposal gains net of related expenses amounted to RMB 5.059 billion[41] - Intangible asset amortization related to acquisitions was RMB 1.249 billion[39] - Donations for SSV and CPP projects totaled RMB 12 million[42] - Basic earnings per share were RMB 4.479[48] - Total equity as of January 1, 2023, was RMB 782,860 million, with retained earnings of RMB 705,981 million[55] - Comprehensive income for the period was RMB 24,789 million, including a net profit of RMB 25,838 million[55] - Revenue from value-added services for the three months ending March 31, 2024, was RMB 78,629 million, with a gross profit of RMB 45,022 million[64] - Revenue from fintech and business services for the three months ending March 31, 2024, was RMB 52,302 million, with a gross profit of RMB 23,851 million[64] - Total revenue for the three months ending March 31, 2024, was RMB 159,501 million, with a total gross profit of RMB 83,870 million[64] - Revenue from value-added services for the three months ending March 31, 2023, was RMB 79,337 million, with a gross profit of RMB 42,739 million[64] - Revenue from fintech and business services for the three months ending March 31, 2023, was RMB 48,701 million, with a gross profit of RMB 16,801 million[64] - Total revenue for the three months ending March 31, 2023, was RMB 149,986 million, with a total gross profit of RMB 68,182 million[64] - The company's shares have been listed on the Main Board of the Stock Exchange since June 16, 2004[57] - Accounts payable aged 0 to 30 days increased to RMB 106,962 million as of March 31, 2024, compared to RMB 94,537 million at the end of 2023[121] - The total number of employees as of March 31, 2024, was 104,787, compared to 106,221 as of March 31, 2023[144] - Daily active accounts (DAU) data is highlighted as a key metric[181] - Local market games refer to the company's operations in the Chinese market, excluding Hong Kong and Macau[182] - Earnings per share (EPS) is a significant financial metric mentioned[185] - Financial technology (FinTech) is a focus area for the company[186] - The company's financial assets include other comprehensive income and profit/loss items[187][188] - The company uses Hong Kong dollars (HKD) as its reporting currency[189] - International Data Corporation (IDC) is referenced as a data source[191] - Monthly active accounts (MAU) data is another key metric[194] - The company's financial data is reported in US dollars (USD) for international markets[198]